Climate for change

As food issues develop into political hot potatoes, CIES has often taken on the role of referee, the voice of logic and reason in highly charged emotional debates involving retailers, vendors and an increasingly powerful—and vocal—consumer lobby. However, the association's overriding goal is to be the worldwide agent for change, bringing best practices in retailing to a global level and turning issues into solutions.

On the eve of the association's 42nd annual Executive Congress in Stockholm last month, Progressive Grocer spoke with Feargal Quinn, the association's chairman and chief executive and managing director of Ireland's Superquinn chain, about the state of global retailing, CIES' current and future initiatives and the outlook for his own chain.

"The easiest way to explain CIES' goals this year and next is to take a look at the business card I carry," says Quinn. "Our first mission is to anticipate change in the food business, identify future trends and advance best practices techniques. The second is to improve company performance and professional standards of retailers and suppliers in the service of consumers worldwide and, third, to provide an international business forum for member CEOs and senior management."

Quinn concedes these are just the basics and they are subject to change. "But it's becoming clear that as we talk about the global marketplace, economy and customers, what catches us by surprise are the differences from region to region. Catching our attention at the moment are differences in what consumers buy on both sides of the Atlantic," says Quinn, noting that this is causing some unlikely trade wars and differences of opinion between the United States and Europe. "The basic one at the moment is the strength of the consumer lobby in Europe with regard to concerns about genetically-modified food. Hormones in beef remain the big trade relations issue in Europe—so unacceptable that you can go to jail for being in possession of it. This is a good example of a situation in which a forum like CIES can bring the two sides together," Quinn says.

The two sides in this issue are suppliers and retailers, in this case the latter representing consumers, he adds. "I really don't see any progress on this front at the moment." The elections in Europe bring high-profile issues like this to a virtual standstill, and few politicians would be inclined to make any "dangerous" decisions until after last month's elections, according to Quinn.

Quinn concurs that more and more issues in the food industry are being politicized. "I'm not sure how easy it will be for CIES to get the industry and the consumer lobby together. But we can get retailers and manufacturers across the table from each other to discuss possible solutions. We thought we had something in April when the solution was to have clear labeling of genetically-modified foods. But consumers said they didn't want that at all and it appears that companies refusing to stock anything containing genetically-modified organisms showed an increase in business," he says.

Certainly one of CIES' priorities is the unification of European currency, with 11 EU countries slated to have one currency by 2002. "Our priority is to make sure the changeover takes place with the greatest of ease. The EU has given countries a lot of freedom as long as change takes place within a six-month period. Frankly, most retailers don't want six months of two currencies. They're calling it the 'Big Bang' changeover. You come in with old money and get change in the new. On this basis, the changeover can take place in days," Quinn says.

CIES is in favor of the shift. But retailers still have to convince certain national governments that this is the way to go. The major voices of concern are primarily among the banks and vending machines, which want more time to make the change.

An international membership drive will remain one of the association's major initiatives this year and next, according to Quinn. "Wal-Mart is one of the biggest members ofCIES. But there are very few American companies thathave expanded outside North America as opposed to European companies such as Carrefour, Delhaize and Ahold who have made the move outside their own borders. But many American companies are having their voices heard through FMI. But CIES offers something different. We are a worldwide forum, not a competitor to FMI, and many American companies are realizing they can learn a lot from Europe and Asia. Just a generation ago, it was the other way around. Furthermore, with all the mergers and acquisitions in the United States, retailers find it increasingly difficult to be open about their plans. CIES presents a wider forum for the presentation and exchange of ideas," says Quinn. However, he quickly adds that he also sees an opportunity for joint forums with other associations, such as the highly successful meeting that took place with FMI last year in Boston.

Additionally, the opportunity exists for collaborative marketing efforts. Until now, CIES has been largely retail driven. "But all of our committees have active membership among suppliers, and the supply chain and ECR are clearly collaborative efforts," Quinn notes. One thing that will keep these efforts vibrant is the involvement of the CIES' Management Develop-ment Program (formerly the Young Executives Confer-ence). The Management Development Program, now numbering 150, is more involved in developing themselves rather than trying to determine the future of retailing in Europe. However, their input on store operations in Europe has been invaluable and, as Quinn puts it, "You couldn't pay consultants to get what you did from this group."

For Quinn, speaking as both head of CIES and as a retailer, the elimination of competitive barriers remains a major challenge. "We do business in a Europe which no longer has customs barriers. Many other regulations are disappearing and currency barriers will shortly come down. There are very few barriers to competition left for anyone sweeping across Europe such as Aldi, Lidl, and now a rapidly developing discount chain business." However, he also points out that others couldn't cross national divides—due more to cultural differences than anything else. For instance, Tesco moved into Ireland in the 1980s and left five years later. Tesco also moved into France and withdrew in four or five years. Similarly, some of the German companies that went into Britain didn't succeed.

"Elimination of regulatory barriers is no guarantee of success if you don't adjust for cultural differences," says Quinn. "Therefore, another of CIES' big challenges is to help satisfy changing consumer demand. "We listen to our customers at Superquinn and I think it all comes back to food safety. Ten years ago, we were the first in Europe and probably in the world to set up a traceability program by showing a photo of the farmer that supplied our beef that week. I think the strategy paid off. During the Mad Cow Scare, people looked for quality assurance and we were the only company to show an increase in beef sales. I believe it's a matter of staying ahead of customer concerns," says Quinn.

In May, Superquinn took it to a new level by instituting DNA testing of meat products. In a program called Trace Back, developed by the chain and the Department of Genetics at Trinity College in Dublin, a sample or "fingerprint" is taken of every animal slaughtered. "It enables us to trace every animal back to its source," says Quinn, noting that the company intends to begin promoting it to consumers.

As to the state of meal solutions in Europe, Quinn, as others, points to Marks & Spencer as the model for success in production and distribution. "They were textile people who moved into food without the burden of traditional thinking on how things should be done. This was a tremendous advantage for them," he notes.

Superquinn's own supply chain has a way to go, he concedes, noting that the company recently moved to an EDI-driven central distribution system—through a third party for chilled and frozen products which are shipped in one truckload daily to each store. "We had the benefit of coming in late and learning from past generations. But it's worked out very well and increased service levels to the stores."

Turning to the growth potential for the chain, Quinn notes that the 17-store chain plans to open four new stores in the next two years and intends to get to 24 stores within four years. This expansion will take the chain some 200 kilometers south and west of its Dublin base, requiring a different distribution system, he says. "We've never considered expansion outside of Ireland. We're a family company and we finance internally." Meantime, the company is expanding into the area of finance. In a move reminiscent of Ukrop's in the United States, Superquinn has obtained a banking license and entered a joint venture with GSB, an Irish bank, to open branches in all 17 stores.

Asked about the possibility of additional store formatsfor the chain, Quinn replies: "That's for the next generation.I have two sons in the business and we'll let them take careof that."